Taking a breather….

As Parliament closed for the Easter recess there was a sort of stunned silence that reigned over the precinct. It was as if the guns had gone silent following a truce declaration.

Maybe it was because parliamentarians were looking at their piled-up in-trays as they left or were considering the legislative backlog that had built up and the long list of promises that had been made to get the country back on its feet. Nevertheless, the feeling that change was coming was palpable.

At least in the last few weeks people were smiling and looking more cheerful, saying “good morning” to all and sundry – a pleasant habit of long ago which has now returned. The ambiance at portfolio meetings has improved dramatically with many a parliamentarian having to carry a lesser amount of political baggage.

An improved atmosphere has also been noticeable in the National Assembly, despite hard debate on such issues as the Political Party Funding Bill and the motion for an early end to the next parliamentary session. Such issues would cause heated discussions between MPs, delegates and people’s representatives in any parliamentary forum worldwide but the angst and gloom caused by a feeling of helplessness has gone.

Long walk

The journey from the days when those two ridiculous men in gum boots, red hard hats and an old water pump tried to explain away the Nkandla swimming pool as a “fire pool”, lasting until the other day when everybody woke up to hear that the country had squeaked through with a Moody’s stable rating, has been a long and exhausting one.

At one stage it seemed that scriptwriters were on the loose trying to dream up impossible situations for the next episode of a TV series.

Film locations moved from Saldanha Bay one minute, to the Free State the next, and then to Gold Reef City; from 54 Sauer Street, Johannesburg to the Union Buildings in Pretoria; from the Constitutional Court, the British Houses of Parliament, Moscow, Dubai, to a chicken coop in the King Cetshwayo district of KwaZulu-Natal, and from a large domestic home in Saxonwold, possibly with a shebeen, to the steps of the National Assembly in Cape Town.

All of this is impossible, it seemed. What could tomorrow bring that could possibly exceed yesterday?

Never ending

Now we hear from the Hawks that some nefarious types, who illegally trade in abalone, delivered at some stage a cartload of money to the gates of Nkandla to ensure the retention of a certain Cabinet minister.

Who could possibly have written such an outlandish, disconnected and never-ending series of scripts?

For the average South African, it has also been a highly expensive journey. Very few are better off because of the disasterous reign of Jacob Zuma, except of course a notable few who were pulling the strings. Most are worse off. It has been a disgraceful episode in the country’s history and the whole of the sordid story is sadly yet to emerge.

Chinese trains

The news recently in the Portfolio Committee of Transport that the Transnet heist has paled the Eskom heist into insignificance brought up the awful thought of another round of endless parliamentary inquiries. But that cannot happen. It should be left to the Hawks. There is just not enough time in the diary and, in any case, with Parliament closing early for next recess who knows what will be further uncovered. The parliamentary programme is now far too behind for more navel gazing.

There is much outstanding legislation needing urgent debate and coming up are the important issues of land reform, minimum wage finalisation, mineral resources charters, decisions on tolling principles, health crisis controls, and energy mix finalisation. Fortunately, we do not have a sitting President who will hold up legislation for personal reasons, as Jacob Zuma did with the FICA Bill.

Looking ahead

Parliament will now shut down its next and second of the year session earlier on June 18 and return later August 13 for the third session. With some 47 Bills to be processed by Parliament, this will be an embarrassment. Quite obviously the reason for an early constituency period is politically driven, a further backlash of the Jacob Zuma era. It could be a snap election. Who knows?

It will now be hard task to deal appropriately with such key laws in draft including the Mineral and Petroleum Resources Development Amendment Bill, the Minimum Wage Bill, the Basic Conditions of Employment Amendment Bill, the Cybercrimes and Cybersecurity Bill as well as the Expropriation Bill, the Copyright Amendment Bill and the Critical Infrastructure Bill before June 18, but the delay has to be recognised as fact and put down to damage control.

Fixed anchors

Despite all this, Parliament has preserved its status despite the political moves to challenge its structure. It has won the day in the separation of powers battle, despite losing a little of its dignity. It has become the battlefront for all that is right and the only real venue for its people to be represented, despite there being no real constituency system but only a party list process.

But most important of all, the Constitutional Court was seen and heard to be arbiter of truth and good reason. This gives us every confidence that the land reform and restitution issue, an issue that was never going to go away, will be handled in the same manner with a good mix of common sense, fairness to all and proper application of the law. We remain positive.

Mining and petroleum bill to hit snags

Overwhelmingly evident is the cloud hanging over the Mineral and Petroleum Resources Development Amendment Bill (MPRDA), linked inextricably to a troubled Mining Charter, some movement on the MPRDA being necessary to restore stability to the mining industry in the form of legislative clarity.

Legislative clarity will also allow the petroleum and gas industry to hopefully go into a development phase. Here the players need an equal playing field, the State in this case getting a free stake possibly at 20% but paying no development costs since the State now has ownership of the resources.

Free lunches

There is one further possible hurdle on the horizon. Aside from issues surrounding the Charter, which is technically a non-parliamentary issue, the application of Parliamentary Rules regarding the great number of changes that are being made to the Bill raise procedural issues.

It is indeed a very different Bill to that which was voted through Parliament earlier and passed by the National Assembly.

For the moment, now that provincial opinion on the more recent changes to the MPRDA have been returned, the provinces each having voted and recorded their nine mandates on the subject, the idea is that the Bill can then finally be returned to the Presidency, possibly via the NA Committee to lodge the changes.

First things first

There is a sense emerging that the offshore gas industry is a little happier with the free carry proposals but on the other side of negotiations it appears, from the media, that the Chamber of Mines is struggling to find common ground with Minister Zwane on the Mining Charter, referred to in the MPRDA but not legislatively part of it.

It is difficult to imagine any Mining and Petroleum Resources Development Act, as amended, being in force without an agreed and new Mining Charter in place. However, developments in this area will have to be watched.

Last in queue

In the list of Bills before Parliament the MPRDA has been listed last (and therefore the longest under debate) for nearly three years, except for a short period when it went to the President. This reflects the long tussle involved.

The four major hindrances were the extended negotiations with the offshore petroleum industry on the free carry issue; the fact that President Zuma returned the Bill approved unsigned insisting that it be considered by all nine provinces; issues surrounding what the Minister has defined as “strategic minerals”; the thorny question of mineral beneficiation and the completion of the mining charter, to which the MPRDA refers but remains not incorporated.

Next process

Many more issues have still to be debated, whilst the basic parameters will have to come to a head on the parliamentary “rules of the game” regarding the passage of the legislation itself. Meanwhile, NCOP hearings on the Bill have been scheduled for the last two weeks of June 2017.

Throughout, the “elephant in the room” for the mining industry has remained the Charter itself which Minister Zwane has stated will be “the most revolutionary Charter ever produced.”

Possible slow down

Meanwhile on the MPRDA, Opposition members will no doubt study closely the Rules of Parliament which state, as was the case with the FICA Bill, that if a Bill is returned unsigned then only the issues for which the Bill was returned may be altered and then only once.

However, unlike the FICA Bill which was returned on the basis of one issue, that of unwarranted searches the MPRDA Bill was returned on the basis of lack of consultation with the provinces.

To amplify, if the President only returned the Bill on the basis that the NCOP and National House of Traditional Leaders had not been consulted, it may be a contested issue as to whether the Bill will be challenged under these Rules. This is a legal issue.

The Legal Resources Centre is quoted as being interested in such a challenge.

Looking ahead

For years, it has been the view of many that both industries that each should have its own “MPRDA”, especially in the light of the fact that both have their own specific and very different Charters.

Whilst crude oil, subsequently refined to petroleum and gas, are certainly natural resources now owned by the State, theoretically the only resources that are ‘mineral’ are those which have a crystalline molecular structure and are “mined”. This would naturally exclude extracted crude oil and gas.

Two is not one

Consequently, both industries, which fall under two government departments and which are distinctively different from one another, have historically been under one piece of legislation governing all geological resources.

This difference between the two industries is expressed in many ways. The petroleum industry is centred around its refineries, very much technical industries with ‘upstream’ components in importation and exploration and ‘downstream’ interests involving distribution, retailing and property interests. Their product is very directly linked to the cost of doing business and the cost of living.

Meanwhile, the mining industry is essentially involved in extraction with massive labour factors, high capital costs, sophisticated export involvements and beneficiation. Its product is closely linked to the survival of industry in general and is directly linked to GDP.

Legislatively, therefore, one garment certainly does not fit all – despite each industry having its own charter. Inevitably separate legislation will have to be developed but such changes are seen as being down down the road for the moment.

Damaging delays

Whatever route the Bill now takes in Parliament, any challenge to its progress will be particularly frustrating for investors if there are more delays. Those issues mainly arise in the mining sector where far more is at stake and consequently rating agencies are flagging Minister Zwane’s actions. The gas exploration industry is clearly tired of waiting.

The results of three days of parliamentary hearings on the Bill, which have included some side issues such as Shell SA on the future of shale gas and any demands from the House of Traditional Leaders, should prove interesting.

The major issue remains as to what is government policy is on the whole particularly regarding labour as distinct from just Cabinet ambitions for BEE participation percentages.

Next stages

Most attention will now fall upon the complementary non-legislative document, the Mining Charter, despite the unclear parliamentary situation. Following the public hearings, the NCOP Select Committee will summate these meetings and the relevant departments will respond over the following days.

Possibly, at some stage, Minister Zwane will address Parliament on the issue to clarify the situation of government’s view and relevant comment on the Bill will also no doubt arise from media briefings by the Ministry on both subjects. For the moment, much of the issue will be dictated by events outside of Parliament.

Some sort of movement on MPRDA at last……..

sent to clients 18 March…..In a parliamentary document recently published it is shown that the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill has been sent on a token trip through the National House of Traditional Leaders for comment in thirty days and then to be returned to the Portfolio Committee on Mineral Resources.

This is probably for some temporary major changes to be made to the Bill after debate until such time as two new Bills, one for the mining industry and one for the oil and gas industry, are drafted in time to come. No doubt this movement was initiated as the result of the recent meeting between President Zuma and business leaders.

The extraordinary affair of the MPRDA has been going on since the first draft of the Bill was published for comment in December 2012 regulating extensively the exploitation of minerals and resources and the legal movement and transfer of resource rights. Both industries have their own and very different BEE charters and the single Bill deals with both and many empowerment factors.

Core issues

Two issues of note were that in the new Bill as originally proposed the Minister was to form a new “entity” which will “promote onshore and offshore exploration for and production of petroleum” and which will also “receive, store, maintain, interpret, add value to, evaluate, disseminate or deal in all geological or geophysical information” relating to petroleum and gas exploration matters.

Secondly, sections 80 and 84 of the anchor Act were to be amended to provide for State participation in any successful minerals and gas/oil development exercises carried out by the private sector, the Bill providing for a State right to free carried interest in all such exploration and production rights.
Specific details regarding the extent of the “free carry” were to be published in a government gazette, a figure of 20% being bandied about at the time. “We are on the path of changing the mining and petroleum industry in South Africa, whether you like it or not,” said Mineral Resources Minister Susan Shabangu earlier in 2014.

Strong views

Accompanied by a public outcry and strongly worded objections from private industry, foreign companies and other institutions, the Bill reached Parliament virtually unchanged. Again, brought up before the Portfolio Committee on Mineral Resources in public hearings, were strong objections from Opposition MPs and institutionalised industry, neither of whom minced their words, describing the Bill, in one case, as a “self-destruction tool of South Africa’s investment climate.”

Nevertheless, the ANC Alliance continued on their course and the Bill was hammered through in a rush at the end of the parliamentary term, the ANC summonsing through its whip sufficient numbers.

In the background, as the Bill went through Parliament, was the fact that the Department of Mineral Resources and the Department of Energy were only just completing their split apart. Crossed wires were the order of the day.

Nothing happened

Since that date the Bill has sat in limbo; a new Mineral Resources Minister Ngoako Ramatlhodi agreeing shortly after with the with mining companies and the Chamber of Mines that the best and fastest way forward to bring certainty to the mining and oil drilling industry would be to pass the Bill subject to amendments based on a new approach to the mining beneficiation issue.

Secondly, the matter of state “free carry” could be dropped.

At the time it was guessed that at least a year and a half would be the delay if two replacement Bills were to be drafted, separating mineral resources from oil and gas in the light of the fact that both have separate and very different BEE charters. The quicker alternative to bring some certainty was that temporary amendments to the existing Bill should be made.

Despite this, the Bill has just stuck right there, in the President’s office, until recently, now moving back to Parliament because, as is suspected, business leaders in their recent discussions with President Zuma must have drawn his attention to the continuing lack of lack of certainty in both industries because of unknown legislative changes about to occur and an apparent inability by Cabinet to give clear policy leads.

So where are we?

So as far as the MPRDA Bill is concerned, there is movement in the goods sidings but whether any train is about to start on a journey can only be known when a meeting is scheduled by the Portfolio Committee on Mineral Resources. Yet another minister is the train driver.

Mineral and Petroleum Act extends State rights…

New MPRDA starts with 20% free carry, maybe more….

The Mineral and Petroleum Resources Development Amendment Bill, the legislation that will give the state a right to a 20% free carried interest in all new exploration and production rights in the energy field, has been passed by Parliament before it closed and sent to President Zuma for assent. According to press reports, new minister of mineral resources, Ngoako Ramatlhodi, may have halted the process by request, however, in the light of public sentiment and opposition moves to challenge the Bill’s legality.

Section 3(4) of the Mineral and Petroleum Resources Development Act (MPRDA) currently states that the amount of royalty payable to the State must be determined and levied by the Minister of Finance in terms of an Act of Parliament. This Act, in force, is the Mineral and Petroleum Resources Royalty Act 28 of 2008 but considerable uncertainty always surrounded how this would work and what was actually meant.

Any uncertainty has now been removed and the MPRDA amendments now passed have brought to an end a process which started when the draft Bill was first published for comment in December 2012.

Beneficiation of minerals included

The legislation seeks to “regulate the exploitation of associated minerals” and make provision for the implementation of an approved beneficiation strategy through which strategic minerals can be processed locally for a higher value – the exact definition of the word “beneficiation” yet having to be defined.

Stockpiles and residues affected

The new Act also states that regulations will apply to all historic residue stockpiles both inside and outside their mining areas and residue deposits currently not regulated belong to the owners. Ownership status will remain for two years after the promulgation of the bill.

In addition to the right to a 20% free carried interest on all new projects, ownership by the state can be expanded via an agreed price or production sharing agreements.

The NCOP concurred with Bill on its passage through Parliament and made no changes.

Legal commentators note that the Royalty Act, at present in force, triggers payment in terms of the MPRDA upon “transfer”, this being defined as the consumption, theft, destruction or loss of a mineral resource other than by way of flaring or other liberation into the atmosphere during exploration or production.

The Royalty Act differentiates between refined and unrefined mineral resources as “beneficiation”, this being seen as being important to the economy; incentives being that refined minerals are subject to a slightly lower royalty rate.

Coal and gas targeted maybe

Nevertheless it appears, commentators note, that in terms of mineral resources coal is being targeted and also zeroed in on is state participation in petroleum licences. Others have pointed to the possible wish of government to have a state owned petroleum entity such as PetroSA to be involved fracking exploration.

Earlier versions of the Bill entitled the State to a free carried interest of 20% and a further participation interest of 30%, with the total State interest capped at 50%; however, the version that Parliament approved removed the reference to a 30% participation interest as well as the limit of 50%, effectively giving the State the right to take over an existing petroleum operation, law firm Bowman Gilfillan explained in a media release earlier this month.

Democratic Alliance (DA) Shadow Minister of Mineral Resources, James Lorimer said in a statement that the Act, “would leave the South African economy in a shambles”, adding that this would lead to people losing their jobs.

The DA has said it has now begun a process to petition President Zuma, in terms of Section 79 of the Constitution, to send this Bill back to the National Assembly for reconsideration,” he said.

Chamber opinion differs

Surprisingly, the Chamber of Mines stated that it “generally welcomed and supported” the approval of the MPRDA Amendment Bill, adding that it believed significant progress had been made in addressing the mining industry’s concerns with the first draft of the Bill, published back in December 2012.

Clearly the mining and petroleum industries particularly gas exploration industries, both of whom have separate equity BEE charters, are still very much at odds on the effects of the promulgation of such an Act, as is DA and the ANC.

However, he said that he was confident that all stakeholders in the both industries would look back on a their association with black empowerment with understanding and pleasure, despite the opposition to the Bill on various differing and wide-ranging issues at present.

Bill will create right environment

Mabuza, who is deputy director general, mineral and policy promotion,department of mineral resources (DMR), said industry will be surprised see how much this legislation in the years to come will have contributed to the country’s development, both in the mining, liquid fuels industry and business in general. He told told the portfolio committee on mining resources, when briefing MPs on the Bill page by page, that it was important to understand government’s viewpoint as far as the oil and gas industry is concerned.

“We want to see that no partnerships created by the Bill are mutually exclusive or self interested”, he said. “We wish to create an environment where the state participates together with mining and gas industry with nation’s developmental objectives in mind.”

Blank cheque

“We give you the assurance”, Mabuza said, “that any regulations which are to follow will provide the kind of certainty sought in both the mining and petroleum industry”.

Opposition members still called to see the basis of the regulations first before further debate, since they claimed that at present, and as things stood, the wording of the Bill amounted to giving the state “a blank cheque” by not knowing what regulations were to be imposed.

The minister objected to this, saying that trust was called for and DMR would sit down with other departments and stakeholders and agree upon regulations within the framework of the Act. “This is the only way things can work”, Mabuza said. “That is why the Act is a framework, with us all working from this plan.”

Working with stakeholders

In tracing the history of the MPRDA, deputy Mabuza and his co-presenter for policy development in DMR, Adrian Arendse, continually referred to stakeholder meetings throughout the process over the years, including stakeholder workshops where the various parties consulted were broken down into sectors such as environmental, petroleum industry, mining industry, finance and bankers and legal interests.

“We received commendable inputs from these workshops and in an overall sense, particularly where mining and petroleum was concerned and we have received both consensus and support for the proposals now before Parliament.”

Not conducive

Opposition parliamentarians denied this saying from what they had heard that there had not been overall consensus on many issues and the complete lack of uncertainty. Lack of clarity on state motives was a total disincentive to investors, commented one MP. Said another opposition MP, “Mining industry representatives have said in the media that this Bill will not grow the industry, so tell us why you think it will.”

Deputy director Mabuza, in response, again gave assurances from government that the proposed Bill represents no fundamental shift in government policy. He said clarity and certainty would follow in the course of time as regulations became evident.

Different horses on courses

Further on BEE matters, questions were asked on how government intended putting into force a parallel BEE charter that incorporated the liquid fuels charter, which called for less than 10% ownership as a target, and the mining charter which was at 27%, plus other anomalies. One MP said that in gas exploration there were enormous developmental costs and the charter made no sense on these issues.

Mabuza said he was aware of the “vast differences” between the two documents and this would have to be discussed in rounds of talks to come and considered carefully. Some of those talks had already started, not referring with whom and on what particular subject.

However, he said there were also big differences in the industries themselves, in both matters of beneficiation and style of operations. DMR wanted to land up in a situation where nobody was disadvantaged, either the poor or the investor.

Exploration rights change

On exploration rights, Mabuza said where the Bill really differed from previous regimes was that the “first come first served” principle in exploration and rights licensing was to be abolished totally. “This system leads to mediocrity”, he said. “We have learnt much over the 15 years with such licensing regulations, during which time South Africa has lost it share in global resource exploration, going from 3% to a current 1%. We do not wish to go down this road any longer”, he said on licensing.

“The first person served often meets the absolute minimum requirements and in so many cases, South Africa has had years of brownfields investments and never the greenfields operations that number 5 or 20 in the queue might have offered for a license on the same project. Mediocrity resulted and South Africa has suffered consequently”, he said.

Mining and energy split

In answer to questions on the liaison between DMR and the department of energy (DOE), Mabuza described the sphere of control under the MPRD Act as being simply a question of “downstream” energy resources being for DOE and “upstream” matters on exploration mining licences and industry regulations being for DMR. Obviously, he said, environmental issues were handled by those competent to do so.

Mabuza said that in coming up with the proposed Bill, DMR had consulted with, or observed, the practices of Canada, Angola, Ivory Coast, Russia and Gabon but opposition members complained that the process of consultation or observation meant absolutely nothing. They want to know who DWEA had listened to in coming up with the current proposals. Those before Parliament said they had made their own decisions and stakeholders had been involved along the road in discussions, particularly in the mining industry.

Planned for the future

Mabuza said that South Africa “remained the wealthiest mining and exploration production country in the world and with Africa reaching never-before, unprecedented levels of geo-political stability, the future was bright. “We have designed legislation that takes both the state and our developmental economy into that future”, he said.

On the subject of penalties in the area of BEE non-compliance, opposition members complained that such contributed further to red tape, political uncertainty and investor complications. Mabuza denied this and told parliamentarians that any penalties written into the Bill were a maximum sum only “and in any case”, he said, the 10% maximum still represented ‘just petty cash’ for most mining companies”.

“We had to bring in some form of penalty where shareholders were alerted to non-compliance otherwise management just carried on regardless of regulations or compliance issues”, Mabuza said.

The state muscles in…

The Mineral and Petroleum Resources Development Amendment Bill, approved by the cabinet in May, has now been tabled in Parliament and sections 80 and 84 of the anchor Act are to be amended, it is proposed, to provide for State participation in petroleum development carried out by the private sector.

The draft bill was published for comment in December 2012 and the proposed legislation, other than to extensively address the issue of re-describing many definitions and include petroleum and petroleum products in many of the issues covered by the Act such as beneficiation, also regulates extensively the exploitation of minerals and the legal movement and transfer of resource rights.

The new Bill also aligns the MPRDA with the newly assented Geoscience Amendment Act and “addresses shortcomings identified, whilst simultaneously streamlining the administrative processes in relation to the regulation of the mining environment management function”.

“New entity” to be formed

Two issues are of note in that under section 71 of the new Bill it is proposed that the minister forms a “new entity” which will “promote onshore and offshore exploration for and production of petroleum” and which will also “receive, store, maintain, interpret, add value to, evaluate, disseminate or deal in all geological or geophysical information relating to petroleum submitted” of the anchor Act, the MPRDA.

The new entity (and it is to be assumed those involved in “exploitation” of minerals and petroleum must through such an entity) must, it is proposed, “ bring to the notice of the Minister any information in relation to the exploration and production of petroleum which is likely to be of use or benefit to the state”. This clause will no doubt cause debate.

The background to the Bill clearly states that in terms of the new proposals, Sections 80 and 84 of the anchor Act are amended to provide for the state participation in petroleum development as described and that the state “has a right to a free carried interest in all new exploration and production rights”.

The proposal that matters

Section 84 of the MPRDA is further amended to include State board participation in the holders of production rights in terms of the proposals.

Section 2.9 of the background giving policy views also underlines the concept that the state will “exercise its rights and options having evaluated the applicable finance modalities to prioritise and optimise state participation in petroleum exploitation and in line with the national developmental priorities.”

The newly tabled Bill states that “specific details regarding the extent of the State’s free carried interests” will be published in a government gazette.

More background articles on subjecthttp://parlyreportsa.co.za//energy/south-africa-at-energy-crossroadsdoe-speaks-out/ http://parlyreportsa.co.za//energy/draft-mprda-bill-for-comment/

Power Africa and a $7bn involvement

In an excellent speech to a young audience at the University of Cape Town but seen the world around, the words “Power Africa” were heard by many for the first time from none other than the President of the US and although by no means did the financial implications have any comparison to the US Marshall Aid plan to Europe in 1945, this is without doubt a much played down mini-version in energy terms.

It comes with an initiative already started; US business plans in energy to Africa already in motion to an estimated tune of $9bn….. and thats just a start, said President Obama. Energy, he said, is the key to Africa and electricity to all homes is the hope for all Africans. Without electricity there is no possibility that education can take root and therefore no way out of the poverty cycle, he said.

Electricity for all

If anything of value therefore from a business viewpoint came out President Obama’s trip other than some very warm-hearted gestures of friendship, it was certainly the extraordinary news that he personally, and that presumably means in fact the US Administration, has plans for a state $7bn initiative to enhance access to every household with electricity across Africa by tapping the continent’s vast energy resources and plenty of money by attracting international US investment.

By reading up on Forbes Magazine, which presumably has one of the best lines on what the US Administration is up to financially, their story on Power Africa appears to be already a well established initiative in the US. For the most part, it is most detailed. The story ends, however where perhaps it should have started.

In the last paragraph, after a giving a picture of the structure of the Power Africa programme and the names of the many partners US partners contributing to the initiative with finance and skills, the Forbes article ends with the observation……

“The recent discoveries of oil and gas in sub-Saharan Africa will play a critical role in defining the region’s prospects for economic growth and stability, as well as contributing to broader near-term global energy security. Yet existing infrastructure in the region is inadequate to ensure that both on- and off-shore resources provide on-shore benefits and can be accessed to meet the region’s electricity generation needs.”

And there, possibly, we have it. A sort of Mozambique Channel gold rush. Yet we are assured by no less than President Obama himself that the USA has enough shale gas not to be importers but shortly exporters.

The Chinese robotic approach

However, to assume the US is looking for new oil fields for its own use or not would be to miss the point. Trading in Africa with Africans was the point in Obama’s speech and hopefully, as the US President says, the USA can add value to what is made in South Africa before it is exported and not just exploit the resources in Africa, as does he says China and others of their ilk. The general feeling remains that China will put in power plants just to get out the resources. Either way, we get power – but the US way seems more sustainable and of use to economic and social needs of Africa in the long run.

Power Africa, Obama says, will, in, addition also “leverage private sector investments” beginning with an additional $9 billion in initial commitments from private sector partners in sub-Saharan Africa. Most of the talk is about land-based electricity grid support, off grid projects, renewable energy projects and supplies to marginalised communities and there was a clear inference in the article that nobody in the US was going out of their way to invest in more coal mines.

The article says most importantly, “Although many countries have legal and regulatory structures in place governing the use of natural resources, these are often inadequate. They fail to comply with international standards of good governance, or do not provide for the transparent and responsible financial management of these resources.”

“Power Africa”, Forbes continues, “will work in collaboration with partner countries to ensure the path forward on oil and gas development maximizes the benefits to the people of Africa, while also ensuring that development proceeds in a timely, financially sound, inclusive, transparent and environmentally sustainable manner”

In other words there has to be certainty.

ParlyReport this week focuses on the introduction to the South African public of the Mineral and Petroleum Resources Development Amendment Bill on that very subject. One would hope that the intentions of government to have a stake in oil and gas exploration success stories do not frighten investors off and that the amendments to the Act stay fixed when agreed, give certainty and are properly regulated and the MPRDA changes are not the precursors of the mess that such regulations are to our North.

MPRD Amendments will cause heat in oil industry…..

Not yet scheduled for meetings by committees or hearings dates in Parliament, is the draft Mineral and Petroleum Resources Development Amendment Bill for which mineral resources minister, Susan Shabangu, obtained cabinet approval for in early December last year and who called for public comment on the draft by the end of January 2013. With a problematic preamble which states that the draft Bill is to promote the concept that “that the nation’s minerals are developed in an orderly manner while promoting justifiable social and economic development”, certain sectors have already provoked considerable industry comment which were presumably have been conveyed in comments to the minister and her department as called for when gazetted.

Amongst the many “refined existing definitions”, the draft Bill as it stands at present and possibly to be tabled seeks to allow the state to acquire by right of ownership any mineral resource to a “free carried interest” in any exploration matter and a right to acquire “a further interest” in that exploration with also production rights “through an organ of state or state owned company”.

Changes are also proposed on the issue of ministerial limitations on the ability of mining companies to trade JSE shares on the open market.

PASA to go

The disbanding of the Petroleum Agency of South Africa appears to be on the cards as well, since the draft Bill clearly relegates all functions of this agency to the department of mineral resources (DMR) and much of the work undertaken with and by DMR will now be allocated under the Geosciences Act, other work passing from DMR to fall under the National Environmental Management Act and therefore bringing in a further department.

“Technically, therefore, government departments would become a petroleum regulator”, was the comment by the Offshore Petroleum Association of SA in the Johannesburg press. However, clarification of this and the situation with regard to PetroSA and the acquisition of exploration rights will presumably emerge during parliamentary hearings since submissions so far in terms of the gazetted document are naturally private.

The draft Bill also contains a great number of changes and redefinitions in the area of associate minerals affecting a broad spectrum of the mining industry. However, in particular the draft states that it proposes to “make provision for the implementation of the approved beneficiation strategy through which strategic minerals can be processed locally for a higher value”. The ability of the minister to set those beneficiation levels and any prices seems to be incorporated.

This specifically will bring focus upon the benefits from tailings in mine dumps, meaning that not necessarily the owners that created them originally will be the sole beneficiaries of subsequent workings. On this subject, the Bill also calls for a new description or interpretation of the word “beneficiation”, this to be inserted into the anchor legislation, the MPRDA itself, by amendment.

Regional mining developmental bodies and environmental committees regarding MPRDA matters are to be set up under the jurisdiction of DMR, such bodies having regional managers with powers.

What effect any submissions have will been seen from the document that is eventually tabled.

SARS role at border posts being clarified …. In adopting the Border Management Authority (BMA) Bill, Parliament’s Portfolio Committee on Home Affairs agreed with a wording that at all future one-stop border […]